Retailers in the Australian pet industry are increasingly looking to affiliate marketing to maximise outcomes and generate more sales online.

Affiliate marketing has existed since the 1980s, pioneered by American Entrepreneur, William J. Tobin. He founded his online retail venture (PC Flowers & Gifts) and launched the first affiliate program with great success. Since these early years, major online retailers like Amazon have fully embraced affiliate marketing and significantly reshaped online shopping.

Despite the fact that affiliate marketing has existed for over four decades, many retailers in Australia, especially those in the pet industry, have only been adopting this form of marketing practice for less than five years.

The global pet industry is expected to swell to $368 billion by 2030. Thousands of pet owners are searching for new products for their loved ones as well as best deals online. With this rapidly growing shopping trend, the potential for Australian online retailers to embrace affiliate marketing is significant.

Edward Chan, Australian entrepreneur and founder of 99Petshops, a price comparison website focused on pet products, says that Australia has only witnessed the tip of the iceberg in terms of growth potential.

“Affiliate marketing provides brands and online retailers a golden opportunity and a competitive advantage against other rivals to tap into the lucrative pet industry.”

Popular online advertising methods includes ‘Pay-per-Click’ (PPC), which can embrace AdWords, Facebook and Instagram advertising, etc. The measure of cost for this form of digital marketing is calculated on ‘cost per click’ (CPC). PPC campaigns are often expensive especially for high ranking / high volume keywords. If poorly managed, costs can escalate beyond the allocated budget, resulting in poor results and high marketing expenses.

Affiliate marketing, on the other hand, allows you to pay only when a sale is made using the ‘cost-per-acquisition’ method (CPA). This system allows you to closely align marketing budget with achieved sales revenue, which in the long run is more efficient and costs can be easily forecasted.

In the affiliate marketing domain, there are ‘advertisers’ and ‘publishers’. Advertisers sell products. Examples include Petbarn, Petstock, Petpost, etc. A publisher on the other hand promotes advertisers’ products. They can include bloggers, influencers on social media, news outlets, price comparison websites (Fashion Lane, PriceHipster, Zyft), cashback websites (CashRewards, Shopback), etc.

Siena McGowan from PetPost claims that the most successful partnerships have been with cashback partners and price comparison websites.

“As a brand that offers affordable pet care, these affiliate channels perfectly complement our ‘Always Low Price’ messaging. They attract customers who are looking for excellent quality at budget-friendly prices, making them a natural fit for our audience. These platforms help amplify our value proposition by providing an extra incentive for shoppers to choose us for their pet care needs”.

There are various ways to get started with affiliate marketing for your business. You can sign up via affiliate networks such as Commission Factory, Rakuten, and Partnerize, where there are account managers guiding you through the affiliate marketing process. Their service can include helping your business partner with publishers, setting up commission rates, setting tracking links, etc. This can all be achieved via the affiliate network platform. Advertisers and publishers are both vetted before they can sign up. This can be a rigorous and time-consuming process. Affiliate networks also charge fees, which can either be a fixed monthly fee and/or percentage of sale generated through their network.

Alternatively, advertisers can choose to setup their own affiliate program without going through the affiliate network. This might be a necessary option for smaller retailers that don’t meet affiliate networks’ minimum requirements (e.g. years of operating business, average order value, etc). Setting up your own affiliate program can be tricky and time consuming, as you will need to vet publishers. This is compared with affiliate networks where you can connect with thousands of vetted publishers with just a few clicks.

Within the pet industry, commission rates can range from 3 to 7 per cent and can comprise of a ‘flat rate’ (i.e. same commission rate for sales) or ‘dynamic’. With dynamic commission rates, you can customise the commission rate by user type (i.e. existing user, new user), or products (i.e. pet food, pet toys, flea treatments, on sale, etc). This allows you to better manage your marketing budget and margin and achieve the desired results.

Often advertisers want to promote products with highest margin such as full price products and unbranded products. However, that’s less enticing for publishers as promoting those products usually have a lower conversion rate. Higher commission rates (higher than 7 per cent) can attract more publishers, however in order to have a successful marketing campaign, advertisers need to provide a good offer, as well as a seamless customer experience. If a publisher sends hundreds of referrals but never converts, publishers are less likely to promote your business in the long run.

Advertisers can partner with a number of different publishers and explore those that perform well. Once a top performing publisher is identified, advertisers can further collaborate with the publisher for optimisation and / or extra exposure including banner placement and email reach. Usually, these opportunities will attract a higher commission rate.

Often advertisers overlook the importance of providing assets for publishers. For example, price comparison websites or search portals often require an accurate, detailed, up to date product feed. Ninety per cent of times advertisers overlook the importance of providing such assets. Not having an up to date (at least daily update), accurate (i.e. correct price, sale price, stock availability) product feeds prevents forming successful partnerships. Other assets include creatives, coupon codes, promotion calendar etc.

With the rise in AI integration, the future landscape of affiliate marketing looks increasingly more promising. Online retailers need to also consider how they should collaborate with influencers, instigate personalised marketing tactics targeting and prioritising mobile users, as well as generating high quality content across diversified platforms. Brands will then be able to reach a wider audience through diverse content creators whilst optimising the performance of their campaigns hinging on accurate consumer insights and trends. 

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